Huntington Ingalls Industries : First Quarter 2026 Q1 2026 Presentation

Published: 2026-05-05 07:23:28 ET HII

Published on 05/05/2026 at 07:23 am EDT

Q1 2026

Earnings Call

President and CEO

EVP and CFO

EVP and President, Newport News Shipbuilding

May 5, 2026

HII

INVESTMENT THESIS

Largest U.S. military seapower provider with leading

all-domain, integrated defense technologies

Over the course of 2026 & 2027:

historical norms

focused on enhancing throughput and reducing cost -

Top priority to get these ships delivered to the Navy

Medium Term Opportunity1:

Free cash flow2 growth enabling disciplined capital allocation and increasing total shareholder value

presentation. Please see the "Forward-looking Statements" section in this presentation and our Form 10-Q for factors that may impact the company's ability to meet expectations.

2 Non-GAAP measure. See appendix for definition and reconciliation.

2026 Operational Initiatives Update

Enhancing Shipbuilding Throughput

» Throughput improvement target of 15% YoY

» Building on ~14% improvement achieved in 2025

» Multiple workforce improvement initiatives

» Continue to expand new Charleston facility

» Utilize contract labor to address critical gaps

Rapidly Growing Trusted Industrial Base Network

» Building on significant momentum

» Doubled outsourced hours in 2025

» Continue to rapidly grow outsourced hours in 2026

Pursuing Multiple Throughput and Growth Drivers

» Achieved 18% YoY throughput improvement in Q1 2026

New Contract Awards

» Ensuring contract awards reflect current operating environment

» Collective bargaining agreement with meaningful wage enhancements ratified at Ingalls Shipbuilding

» Newport News and Ingalls Shipbuilding apprentice schools collectively graduated ~200 future shipbuilding leaders

Three Months Ended March 31

($M) 2025 2026 % Change

Ingalls

Shipbuilding

637

725

13.8%

Newport News Shipbuilding

1,396

1,665

19.3%

Mission Technologies

735

748

1.8%

Eliminations

(34)

(39)

Total 2,734 3,099 13.4%

HII Q1 2026 Revenue

CONSOLIDATED REVENUE ($M)

$3,099

$2,734

Q125 Q126

YoY variance driven primarily by higher aircraft carrier, submarine and naval nuclear support services volume at Newport News Shipbuilding, and higher surface combatant volume at Ingalls Shipbuilding.

HII Q1 2026 Segment Operating Income1

Three Months Ended March 31

($M) 2025 2026 % Change

Ingalls

Shipbuilding

6.5%

Newport News Shipbuilding

3.5%

Mission

Technologies

(12.5)%

Total 171 172 0.6%

$171 $172

6.3%

5.6%

Q125 Q126

Ingalls Segment Operating Income growth was driven by higher surface combatant volumes, partially offset by amphibious assault ship performance. Newport News Segment Operating Income growth was driven by higher volumes, partially offset by contract adjustments and incentives received in Q125, as well as aircraft carrier performance. Mission Technologies Operating Income declined due to lower equity income from nuclear and environmental joint ventures.

HII Q1 2026 Capital Deployment

($67)

($395)

($390)

($71)

($100)

($200)

($300)

($400)

($500)

Q125

($462)

Q126

($461)

Cash balance of $216 million and liquidity of $1.9 billion at quarter end

Net capital expenditures of $71 million were 2.3% of revenues in Q1 2026

Q1 2026 dividend totaled $54 million

Did not repurchase shares in the quarter

FY26 Outlook1

Shipbuilding Revenue

$9.7B - $9.9B

Shipbuilding Operating Margin3

5.5% - 6.5%

Mission Technologies Revenue

$3.0B - $3.2B

Mission Technologies Segment Operating Margin

~5%

Mission Technologies EBITDA Margin3

8.4% - 8.6%

Operating FAS/CAS Adjustment

($44M)

Non-current State Income Tax Expense4

~($20M)

Interest Expense

($105M)

Non-operating Retirement Benefit

$213M

Effective Tax Rate

~17%

Depreciation & Amortization

~$330M

Capital Expenditures

4%-5% of Sales

Free Cash Flow3

$500M - $600M

HII Outlook1 FY26 OUTLOOK1

Shipbuilding medium term2 revenue growth of ~6%

Additional upside from recently announced frigate and battleship

Mission Technologies medium term2 revenue growth of ~5%

Shipbuilding revenue of $9.7B to $9.9B

Shipbuilding operating margin3 of 5.5% to 6.5%

Includes throughput and contract award assumptions

Mission Technologies revenue of $3.0B to $3.2B

Mission Technologies operating margin of ~5%

Q2 2026 Look Ahead

Shipbuilding revenue of ~$2.4B, op. margin3 of 5.7% to 6.0%

Mission Technologies revenue of ~$750M, op. margin of ~4%

Free cash flow3 of ($100M) to $100M

Effective tax rate of ~21%

1 The financial outlook, expectations and other forward looking statements provided by the company for 2026 and beyond reflect the company's judgment based on the information available at the time of this presentation. Please see the "Forward-looking Statements" section in this presentation and our Form 10-Q for factors that may impact the company's ability to meet expectations.

2 Medium term growth represents our expected compounded annual growth rate over the next three to five years.

3 Non-GAAP measures. See appendix for definitions. In reliance upon Item 10(e)(1)(i)(B) of Regulation S-K, reconciliations of forward-looking GAAP and non-GAAP measures are not provided because of the unreasonable effort associated with providing such reconciliations due to the variability in the occurrence and the amounts of certain components of GAAP and non-GAAP measures. For the same reasons, we are unable to address the significance of the unavailable information, which could be material to future results.

4 Outlook is based on current tax law. Variability exists based on how and when individual states conform to recent federal tax law changes.

Appendix

Non-GAAP Information

This earnings presentation contains non-GAAP (accounting principles generally accepted in the United States of America) financial measures as defined by SEC Regulation G and indicated by a footnote in the

text of this presentation. Definitions for the non-GAAP measures, and related reconciliations, are provided below. Because not all companies use identical definitions or calculations, our presentation of these measures may not be comparable to similarly titled measures of other companies.

Segment Operating Income and Segment Operating Margin. We internally manage our operations by reference to segment operating income and segment operating margin and use these measures to evaluate our core operating performance. We believe that segment operating income and segment operating margin reflect additional ways of viewing aspects of our operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business. These measures should be considered in addition to, and not as alternatives for, operating income and operating margin or any other performance measure presented in accordance with GAAP.

Segment operating income is defined as operating income for the relevant segment(s) before the Operating FAS/CAS Adjustment and non-current state income taxes.

Segment operating margin is defined as segment operating income as a percentage of sales and service revenues.

Shipbuilding operating margin, Mission Technologies EBITDA and Mission Technologies EBITDA margin. We use shipbuilding operating margin, Mission Technologies EBITDA and Mission Technologies EBITDA margin to evaluate our core operating performance. We believe these measures reflect additional ways of viewing aspects of our operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business. These measures should be considered in addition to, and not as alternatives for, operating income and operating margin or any other performance measure presented in accordance with GAAP.

Shipbuilding operating margin is defined as the combined segment operating income of our Newport News Shipbuilding segment and Ingalls Shipbuilding segment as a percentage of shipbuilding revenue. Shipbuilding revenue is the sum of revenues of our Newport News Shipbuilding segment and Ingalls Shipbuilding segment.

Mission Technologies EBITDA is defined as Mission Technologies segment operating income before interest expense, income taxes, depreciation, and amortization.

Mission Technologies EBITDA margin is defined as Mission Technologies EBITDA as a percentage of Mission Technologies revenues.

Free cash flow. We use free cash flow as a key operating metric in assessing the performance of our business and as a key performance measure in evaluating management performance and determining incentive compensation. We believe free cash flow is an important measure that may be useful to investors and other users of our financial statements because it provides insight into our current and period-to-period performance and our ability to generate cash from continuing operations. Free cash flow has limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, net income as a measure of our performance or net cash provided by operating activities as a measure of our liquidity.

Free cash flow is defined as net cash provided by (used in) operating activities less capital expenditures net of related grant proceeds.

In reliance upon Item 10(e)(1)(i)(B) of Regulation S-K, reconciliations of forward-looking GAAP and non-GAAP measures are not provided because of the unreasonable effort associated with providing such reconciliations due to the variability in the occurrence and the amounts of certain components of GAAP and non-GAAP measures. For the same reasons, we are unable to address the significance of the

unavailable information, which could be material to future results.

Non-GAAP Reconciliations

Segment Operating Income & Segment Operating Margin

Three Months Ended

March 31

($ in millions) 2026 2025

Ingalls revenues

725

637

Newport News revenues

1,665

1,396

Mission Technologies revenues

748

735

Intersegment eliminations (39) (34)

Sales and Service Revenues

3,099

2,734

Operating Income

155

161

Operating FAS/CAS Adjustment

Non-current state income taxes 8 -

Segment Operating Income

172

171

As a percentage of sales and service revenues

5.6 %

6.3 %

Ingalls segment operating income

As a percentage of Ingalls revenues

6.8 %

7.2 %

Newport News segment operating income

As a percentage of Newport News revenues

5.3 %

6.1 %

Mission Technologies segment operating income

As a percentage of Mission Technologies revenues

4.7 %

5.4 %

Non-GAAP Reconciliations Shipbuilding Operating Margin

Three Months Ended

March 31

($ in millions)

2026

2025

Sales and service revenues

3,099

2,734

Mission Technologies

(748)

(735)

Intersegment eliminations

Shipbuilding Revenues

2,390

2,033

Operating Income

155

161

Operating FAS/CAS Adjustment

Non-current state income taxes

Segment Operating Income

172

171

Mission Technologies operating income

(35)

(40)

Shipbuilding operating income

137

131

As a percentage of shipbuilding revenues

5.7 %

6.4 %

Non-GAAP Reconciliations Free Cash Flow

March 31

($ in millions) 2026 2025

Net cash used in operating activities (390) (395) Less capital expenditures:

Capital expenditure additions (74) (67) Grant proceeds for capital expenditures 3 - Free cash flow (461) (462)

Non-GAAP Reconciliations

Mission Technologies EBITDA & EBITDA Margin

Three Months Ended

March 31

($ in millions)

2026

2025

Mission Technologies sales and service revenues

748

735

Mission Technologies segment operating income

Mission Technologies depreciation expense

Mission Technologies amortization expense

Mission Technologies state tax expense

Mission Technologies EBITDA

Mission Technologies EBITDA margin

7.8 %

9.1 %

Disclaimer

Huntington Ingalls Industries Inc. published this content on May 05, 2026, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 05, 2026 at 11:22 UTC.